Mercator Lines widens loss in Q3

In the third quarter ended 30 September 2014, Singapore-listed Mercator Lines posted a loss of $7.47m, a larger deficit compared to a loss of $3.28m in the same period of 2013.

Revenue during the quarter plunged by 43% year-on-year to $13.26m due mainly to fall in spot dry bulk shipping rates, unscheduled repair for a vessel and new contracts at lower than the previous rates.

“The company is considering various options to strengthen its financial position in light of the current challenging dry bulk markets. Strategic alternatives being considered include raising of capital in the form of debt, bonds and/or equity,” commented Shalabh Mittal, managing director and ceo of Mercator Lines.

Mercator Lines pointed out that the key factors that affected the dry bulk freight market recovery were lower port congestion, the lack of coal demand from China, the after-effect of the stockpiling ahead of the Indonesian ban on raw ore exports, slower Chinese growth and the continued fleet expansion.

Shipping analysts have anticipated the total dry bulk fleet to grow by about 5% in 2015 and 4% in 2016, while total seaborne dry bulk trade is expected to grow at about 4% in 2015.

The weaker demand and continuation of new ship deliveries is expected to keep an oversupplied situation going into the rest of this year, which will continue to put downward pressure on freight rates.